Harvard Case - Neilson International in Mexico (A)
"Neilson International in Mexico (A)" Harvard business case study is written by Paul W. Beamish, C. Bud Johnston, Gayle Duncan, Shari Ann Wortel. It deals with the challenges in the field of General Management. The case study is 16 page(s) long and it was first published on : Mar 4, 1995
At Fern Fort University, we recommend Neilson International adopt a multifaceted strategy to address their challenges in the Mexican market. This strategy involves a combination of organizational change, strategic partnerships, product innovation, and targeted marketing efforts to achieve sustainable growth and profitability.
2. Background
Neilson International, a leading manufacturer of consumer goods, is facing significant challenges in the Mexican market. Despite a strong brand reputation and a successful track record in other emerging markets, the company is struggling to achieve profitability in Mexico. The case highlights several key issues:
- Fierce competition: The Mexican market is highly competitive, with established local players and global giants vying for market share.
- Price sensitivity: Consumers in Mexico are price-sensitive, making it difficult for Neilson to maintain its premium pricing strategy.
- Distribution challenges: The fragmented retail landscape and limited access to distribution channels pose significant hurdles.
- Cultural differences: Neilson's products and marketing strategies need to be adapted to the unique cultural preferences of Mexican consumers.
- Internal organizational issues: The company's organizational structure and decision-making processes are not optimized for the Mexican market.
3. Analysis of the Case Study
To analyze the situation, we can apply a SWOT analysis framework:
Strengths:
- Strong brand reputation
- Experience in emerging markets
- Innovative product portfolio
- Commitment to corporate social responsibility
Weaknesses:
- High product prices
- Limited distribution network
- Inefficient organizational structure
- Lack of cultural understanding
Opportunities:
- Growing Mexican middle class
- Increasing demand for consumer goods
- Potential for strategic partnerships
- Government support for foreign investment
Threats:
- Intense competition
- Economic volatility
- Currency fluctuations
- Regulatory changes
Furthermore, Porter's Five Forces analysis reveals the competitive landscape:
- Threat of new entrants: Moderate, due to the high barriers to entry in the consumer goods sector.
- Bargaining power of buyers: High, due to the price-sensitive nature of the market.
- Bargaining power of suppliers: Moderate, with a mix of local and global suppliers.
- Threat of substitutes: Moderate, with a wide range of alternative products available.
- Rivalry among existing competitors: High, with intense competition from both local and international players.
4. Recommendations
Neilson International should implement the following recommendations:
1. Organizational Change:
- Restructure the Mexican subsidiary: Create a more agile and responsive organizational structure, empowering local managers and fostering a culture of innovation.
- Develop a clear growth strategy: Define specific goals and objectives for the Mexican market, aligning with the company's overall global strategy.
- Invest in talent management: Recruit and retain skilled professionals with local market expertise and cultural sensitivity.
- Implement a performance evaluation system: Establish clear performance metrics and reward systems to incentivize employees and drive results.
2. Strategic Partnerships:
- Form alliances with local distributors: Leverage existing distribution networks to reach a wider customer base and reduce distribution costs.
- Collaborate with local suppliers: Source raw materials and components locally to reduce costs and improve supply chain efficiency.
- Engage in joint ventures with Mexican companies: Explore opportunities to develop new products and services tailored to the local market.
3. Product Innovation:
- Develop products specifically for the Mexican market: Conduct thorough market research to identify consumer needs and preferences.
- Adapt existing products to local tastes and preferences: Modify product formulations, packaging, and marketing messages to resonate with Mexican consumers.
- Introduce new product lines at different price points: Offer a wider range of products to cater to different income segments and price sensitivities.
4. Targeted Marketing Efforts:
- Develop a localized marketing strategy: Utilize culturally relevant messaging and channels to reach target audiences.
- Invest in digital marketing: Leverage social media, online advertising, and e-commerce platforms to connect with consumers.
- Build strong customer relationships: Implement a customer relationship management (CRM) system to track customer interactions and personalize marketing efforts.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core competencies and consistency with mission: The recommendations align with Neilson's core competencies in product development and marketing, while also emphasizing its commitment to innovation and corporate social responsibility.
- External customers and internal clients: The recommendations address the needs and preferences of Mexican consumers while also empowering local employees and fostering a positive work environment.
- Competitors: The recommendations aim to differentiate Neilson from its competitors by leveraging local partnerships, product innovation, and targeted marketing efforts.
- Attractiveness: The recommendations are expected to enhance profitability by increasing market share, reducing costs, and improving customer satisfaction.
6. Conclusion
By implementing these recommendations, Neilson International can overcome its challenges in the Mexican market and achieve sustainable growth and profitability. The company's commitment to organizational change, strategic partnerships, product innovation, and targeted marketing efforts will enable it to effectively compete in this dynamic and challenging market.
7. Discussion
Other alternatives not selected include:
- Exiting the Mexican market: This option would be a significant setback for Neilson and would not address the company's long-term growth ambitions.
- Maintaining the status quo: This option would likely result in continued losses and a decline in market share.
The recommendations are based on the assumption that the Mexican economy will continue to grow and that the consumer goods market will remain attractive. However, there are risks associated with these recommendations:
- Economic instability: A downturn in the Mexican economy could negatively impact consumer spending and reduce demand for Neilson's products.
- Competitive pressures: Intense competition from local and international players could make it difficult for Neilson to maintain market share.
- Cultural misunderstandings: Despite efforts to adapt products and marketing strategies, cultural differences could still pose challenges.
8. Next Steps
Neilson International should implement the recommendations in a phased approach:
- Phase 1 (Year 1): Focus on organizational restructuring, talent management, and establishing strategic partnerships.
- Phase 2 (Year 2): Introduce new product lines tailored to the Mexican market and launch targeted marketing campaigns.
- Phase 3 (Year 3): Evaluate the effectiveness of the implemented strategies and make necessary adjustments to optimize performance.
By taking these steps, Neilson International can successfully navigate the challenges of the Mexican market and achieve its growth objectives.
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Case Description
This case examines a proposed marketing joint venture which would introduce Neilson brand chocolate bars to Mexican consumers. Pepsico Foods' Mexican subsidiary -- already servicing 450,000 retail stores -- has suggested a joint branding agreement. Alternative distribution arrangements are available which would allow Neilson to maintain greater control over its name, at the cost of slower market access. (A sequel to this case is available bearing the same title, case 995G04.)
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